SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Dolvin Mechanical Contractors Ltd. v. Trisura Guarantee Insurance Company, Samson Management and Solutions Ltd., Toronto Transit Commission and Martin Bamford

2013 ONSC 5450

COURT FILE NO.: CV-12-466422

BEFORE: MASTER R.A. MUIR

COUNSEL: R. Harason for the plaintiff

S. Ambrozy for the defendants Toronto Transit Commission and Martin Bamford

S. Ingram for the defendant Trisura Guarantee Insurance Company

HEARD: July 31, 2013

ENDORSEMENT

[1] The plaintiff brings this motion for the following relief:

(a) an order implementing a discovery plan;

(b) an order that the defendants Toronto Transit Commission (“TTC”) and Martin Bamford (“Bamford”) serve a further and better affidavit of documents; and,

(c) an order that the defendants TTC and Bamford produce certain documents without redactions for privilege.

[2] This action arises out of a construction project undertaken by the defendant TTC as owner. The project involved certain interior renovations to the fourth floor of a building owned by the TTC and known as the Inglis Building (the “Project”). The defendant Samson Management and Solutions Ltd. (“Samson”) was the general contractor. The plaintiff was Samson’s mechanical sub-contractor. The defendant Trisura Guarantee Insurance Company (“Trisura”) provided certain surety bonds in connection with the Project. Bamford was the TTC’s supervisor for the Project.

[3] It appears that the plaintiff has not been paid in full for its work on the Project. The amount owing is approximately $100,000.00. The plaintiff has obtained default judgment against Samson in a separate action but has been unable to collect the amounts owing to it. Its judgment and other orders against Samson in the other action also include additional amounts for costs and interest.

[4] This action was started on October 26, 2012. The plaintiff’s statement of claim was amended on December 12, 2012 and again on January 28, 2013. The plaintiff claims against Trisura for payment under a Labour and Material Payment Bond (the “LMP Bond”). It claims against Trisura, the TTC and Bamford for breach of their alleged duty to disclose the existence of the LMP Bond, along with negligence and misrepresentation. It also claims against the TTC for certain funds the TTC paid to Samson ($9,267.48) after being put on notice that the plaintiff had not been paid by Samson.

[5] The parties were able to resolve certain issues prior to argument. Trisura, the TTC and Bamford will not be required to produce any documents dealing with the plaintiff’s mechanical work on the Project until 60 days after the disposition of the defendants’ pending summary judgment motions. It was also agreed that any supplementary affidavits of documents would be served by the defendants by August 31, 2013 (although I have extended this date for the reasons set out below). The defendants, or their representatives, will attend to be examined for discovery by October 31, 2013. Stan Johnson will be produced on behalf of the TTC. Bamford will be produced on his own behalf. Matt Baynton, or some other suitable witness, will be examined on behalf of Trisura.

[6] Italo Di Bonaventura, or some other suitable witness, will be examined on behalf of the plaintiff, if and when the defendants choose to conduct their examinations for discovery.

[7] The defendants’ witnesses will be examined for seven hours each. The plaintiff’s witness will be examined by all defendants for 21 hours in total, if necessary.

[8] The remaining issues argued on this motion related to the scope of documentary discovery and certain privilege issues.

[9] With respect to the scope of production, the plaintiff seeks production from the defendants of the following categories of documents:

(a) documents dealing with issues related to the issuance of the LMP Bond, and a performance bond for the Project, in 2007;

(b) documents relating to other unpaid creditors of Samson;

(c) documents relating to the TTC’s instructions and procedures regarding responses to demands under section 39 of the Construction Lien Act, R.S.O. 1990, c. C.30 (the “CLA”);

(d) Samson payment documents;

(e) documents relating to the termination of Samson’s contract with the TTC;

(f) copies of Trisura’s files relating to the plaintiff’s bond claim and all other claims on the LMP Bond and the performance bond; and,

(g) documents relating to any prejudice alleged by the defendants.

[10] In determining the issues relating to the scope of production I have applied the relevance test set out in Rule 30.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”). I am also mindful of the proportionality requirements of Rule 29.2. In particular, I note that this action seeks payment of an amount very close to the monetary requirements of the simplified procedure provided for by Rule 76.

[11] In my view, the documents requested in (a), (b) and (c) above, are not relevant and need not be produced. The plaintiff’s position is that the TTC and/or Trisura failed to disclose the existence of the LMP Bond to the plaintiff when they knew that the plaintiff was owed money by Samson. The legal issue to be determined is whether the defendants had a duty to disclose the existence of the LMP Bond under the circumstances that obtained in the spring of 2010. Documents relating to the underwriting and issuance of the bonds at the outset of the Project in 2007 can have no relevance to the issue of whether the defendants owed a duty to the plaintiff in the spring of 2010 to disclose the existence of the LMP Bond. In my view, documents relating to other creditors are equally irrelevant. The existence of the LMP Bond was not disclosed to the plaintiff in the spring of 2010. Nobody disputes that. The question of whether or not other claims were being made on the LMP Bond by other creditors of Samson is simply not relevant to whether the defendants should have disclosed the existence of the LMP Bond to the plaintiff. Similarly, the TTC’s practices when responding to section 39 demands under the CLA in general does not assist in determining this question. In my view, it does not matter what the TTC’s practice is when it comes to responding to such demands. What matters is what the defendants’ specific legal obligations were to the plaintiff under the circumstances that prevailed in March and April 2010.

[12] The plaintiff argued that these documents may be relevant to the defendants’ motivation in not disclosing the existence of the LMP Bond. The plaintiff suggested that the defendants may benefit from fewer claims being made on the bonds and therefore had an incentive to not disclose the fact that the LMP Bond was available to the plaintiff. That assertion may or may not be true. However, in my view it is simply not relevant to the issue of whether the duty to disclose existed in the circumstances and whether any misrepresentations were made by the defendants.

[13] None of these categories of documents need to be produced.

[14] In my view, the Samson payment documents are relevant to the issues in this action. The statement of claim clearly raises allegations of breach of trust under the provisions of the CLA. See paragraphs 12-17 of the amended amended statement of claim. A party to an action must disclose all documents relevant to any issue in the proceeding. It does not matter that the breach of trust claim is directed at Samson or that the TTC may have no liability to the plaintiff under the CLA. The TTC obviously has documents relevant to this issue and they should be disclosed. In addition, it is also my view that these documents are relevant to the plaintiff’s “knowing assistance” allegations made against the TTC. See paragraph 50 of the amended amended statement of claim. Finally, the documents requested would appear to be discreet and limited. Production of such documents would not unduly burden the TTC. The documents requested at paragraph 2(ii) of the plaintiff’s proposed discovery plan shall be produced.

[15] The plaintiff argues that documents relating to the termination of the Samson contract are relevant to the limitation issue pleaded by the defendants. The defendants take the position that Samson’s last day on the job was October 4, 2011. The TTC has produced a daily report for that date indicating that Samson was on the job on that day. The TTC has also produced several pieces of correspondence between the TTC and Samson from October 2011 regarding Samson’s default and termination. From these documents, it would appear that Samson’s contract was formally terminated on October 27, 2011. The plaintiff’s claim on the LMP Bond was made on October 26, 2012. The defendants take the position that the claim on the LMP Bond was made outside of the one year limitation period provided for in the LMP Bond. Obviously, the date that Samson ceased work on the Project is relevant to the limitation defence. In my view, further production is required, although I do not see the relevance of further documents related to Samson’s termination. What is relevant are documents relating to any work Samson may have done on the Project for a reasonable period of time after October 4, 2011. In my view, a six month time period is reasonable under the circumstances. The TTC shall produce copies of all daily reports for the Project from October 5, 2011 to March 31, 2012.

[16] In my view, documents in Trisura’s files relating to the plaintiff’s claim on the LMP Bond are obviously relevant and should be produced subject, of course, to privilege. It does appear that Trisura has included such documents in its draft affidavit of documents. However, to the extent that further such documents exist, they shall also be produced. However, in my view, similar documents relating to claims by other parties, or claims on the performance bond, are not relevant and need not be produced. The fact that other sub-contractors of Samson may have made claims on the LMP Bond is simply not relevant to the question of whether the plaintiff has a valid claim on the LMP Bond or on the basis of any other theory of liability that has been pleaded. With respect to the performance bond, the plaintiff is not entitled to make any sort of claim pursuant to that bond. Those documents are clearly not relevant to the matters in issue in this action.

[17] The defendant Trisura has pleaded at paragraph 12 of its statement of defence that it has been “irreparably prejudiced” by the plaintiff’s delay in making this claim. In my view, to the extent that any documents exist to support this allegation of prejudice by Trisura, they are relevant and need to be produced. The TTC does not appear to have made a similar allegation in its pleading. No such documents need to be produced by the TTC.

[18] The final issue to be determined by the court relates to the TTC’s claim of lawyer-client privilege over certain redacted portions of several documents listed in Schedule A to its affidavit of documents. The plaintiff seeks copies of the documents listed at numbers 8 to 14 and 22 to 30 of the affidavit of documents served by the TTC. In my view, the redactions are proper and the claim for privilege has been made out. Moreover, there is no basis to conclude that the TTC has waived privilege over the redacted portions of the documents.

[19] The redactions in question involve communications between TTC in-house lawyers and TTC staff members. Ms. Ambrozy advised the court that she personally reviewed the documents in question and made the disputed redactions. The documents were not redacted in their entirety. This is not a situation where a claim for privilege has been made over entire documents simply because an in-house lawyer was copied on an email or a letter. The documents in question have been carefully reviewed by counsel and the evidence before the court indicates that only those portions of the documents where legal advice was sought or given have been redacted.

[20] The mere fact that these documents were listed in Schedule A to the TTC’s affidavit of documents does not, in my view, amount to a waiver of any privilege. When the affidavit of documents is viewed in its entirety, including the copies of the documents in question that were served with the affidavit of documents, it is clear that the TTC was consistently asserting a claim for lawyer-client privilege over the redacted portions of the subject documents.

[21] I am also satisfied that the reference to certain of the impugned documents in the affidavit of Martin Bamford sworn March 27, 2013 does not amount to a waiver of lawyer-client privilege. Bamford’s evidence in the affidavit has nothing to do with legal advice. His evidence is restricted to whether the documents contain any references to the LMP Bond or to a surety for the Project. I do not view his statements as in any way amounting to a waiver of privilege over legal advice sought or received. The production of these documents is appropriate as is. They do not need to be produced without the redactions.

[22] The defendants shall serve supplementary affidavits of documents listing the additional documents I have ordered to be produced. Given that it was necessary for me to reserve my decision on this motion for approximately three weeks those supplementary affidavits of documents do not have to be served until September 20, 2013.

[23] The parties shall confer and attempt to agree on a form of discovery plan consistent with this endorsement. If the parties remain unable to do so, they may arrange for a telephone case conference with me by contacting my assistant trial coordinator.

[24] Finally, if the parties are unable to agree on the issue of costs, they may make brief written submissions by no later than September 27, 2013.

Master R.A. Muir

DATE: August 23, 2013